Writing Portfolio Essay

Understanding emotions and how we process information to make decisions is vital to investment success. This is true whether you manage your own portfolio or whether you have hired a professional portfolio manager to handle the task. The sad reality is that most professional money managers don’t understand that their emotional judgements are likely harmful to portfolio performance. Professional money managers are at the mercy of the investor’s behavioral biases without even realizing it. For example, if

Model (CAPM) and the Fama and French (F&F) Three-Factor Model (TFM) Introduction During the 20th century, securities trading in the stock market has significantly increased. Since then, many studies have analysed the performance of managed portfolios and evaluated the way investors explain returns on stocks (Jagannathan and Wang, 1996). The most common theory used by managers and practitioners is known as the Capital Asset Pricing Model (CAPM). However, this theory has been criticised by some

A Random Walk Down Wall Street There is a sense of complexity today that has led many to believe the individual investor has little chance of competing with professional brokers and investment firms. However, Malkiel states this is a major misconception as he explains in his book “A Random Walk Down Wall Street”. What does a random walk mean? The random walk means in terms of the stock market that, “short term changes in stock prices cannot be predicted”. So how does a rational investor determine

becoming a portfolio manager! Before attempting those questions, be sure to read carefully Chapter 8 of Bodie, Kane, and Marcus’s Investments book.

The averaging out of independent risks in a large portfolio is called diversification. The principle of diversification is used routinely in the insurance industry. In this paper I will talk about two different types of home insurance and talk about the different risks associated with each. Discussion A portfolio is used to describe a collection of securities. In finance, the risk of an individual security differs from the risk of a portfolio composed of similar securities. In order to help

basic concept of the modern portfolio theory was written by Harry Markowitz, in which he explained that assets in an investment portfolio are not only to be selected on the basis of its merit but also by how it’s price changes relative to every other asset in the portfolio. Investment can be stated as a trade-off between expected return and risk, the riskier the investment the higher the return and vice versa. It allows us to make a decision to choose between the portfolio with either the highest rate

According to early academic researches, CAPM seems to have some problems when examining assumptions and empirical testing. Researchers attempt to develop a new model by improving the weak points and make it more realistic which enable investors understand more about financial market situation. Bodie et al. (2014) state that multifactor model could provide better explanation of security returns. Merton (1973) develop ‘Intertemporal model’ to imply that by using beta as a risk measure alone might not

model strength to out-of-sample predictive accuracy is to be determined, by dividing each models portfolio into four segments, High Adjusted R2 , Medium Adjusted R2, Low Adjusted R2, and a random mixture as the control. The research uses the S&P500 as the “market” portfolio. Using ten years of monthly data from the period between 1st January 2004 to the 31st November 2014, as in sample data. The portfolio returns were then monitored for an

In order to achieve this vision, NSR places their focus on: • Asset Management which seeks out new portfolio opportunities while focusing on growth and portfolio revenue • Acquisitions which concentrates on new properties to broaden the portfolio • Portfolio, Development and Centre Management which is mostly managing third part centres • Capital Management which is sustaining an effective capital structure The above focus

are driven by the potential to increase the risk/return ratio of a portfolio through investing in countries with different political and economic environments. This allows investors to add assets to their portfolio with low or negative correlation with other assets classes and provides increased gains associated with Modern Portfolio Theory (MPT). Although the majority of recent literature has focused on the benefits of portfolio diversification from investing in real estate equities, this paper